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Money Moves With Deirdre Bolton

Education. Deirdre Bolton. Investors looking for alternatives in a volatile market can find options and advice here. New.

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Us 11, U.s. 7, North America 6, Cisco 5, Europe 4, Larry Fink 3, Sears 3, Herbalife 3, Berlin 3, Mary 2, Kkr 2, Steinberg 2, S&p 2, John Paulson 2, Nyu 2, Scott Galloway 2, Bitcoin 2, Jesse Owens 2, Julie Hyman 2, Sysco 2,
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  Bloomberg    Money Moves With Deirdre Bolton    Education. Deirdre Bolton. Investors looking for  
   alternatives in a volatile market can find options and advice here....  

    December 9, 2013
    2:00 - 3:01pm EST  

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that you would not shut down any effectivelys, but he had to agree. he got it done. >> thank you so much for bringing us that story. one we have been watching for a long time. "money moves" is next. >> welcome to "money moves," where we focus on alternative assets. we show you what investors and entrepreneurs are doing, as well as what is going on in hedge funds, private equity, real estate, and more. regulators may approve a tougher version of the volker rule as early as tomorrow. larry fink tells us how he sees it from atop the world's biggest money manager. we will bring you the details behind john paulson's comeback, and the future of gaming is in
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focus as well. cutting-edge games, cross- platform engine technology, that is the match that they are betting on. with hedgeg to start funds and the case against steve collins sac capital -- steve cohen's sac capital. claimsthe defendants that calling himself can help his defense. what is the latest? >> these a lot -- these findings came out late on friday, facing trial in january, we know that he will not testify in this case and that he intends to assert his constitutional rights, but that he did produce a 40 pages of the main deposition with the sec in which he stated he made trades in shares of wyatt since acquired by pfizer based on
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advice from a friend and fellow hedge fund manager. they say that this bolsters the defense and he says he wants to prove that he had nothing to do with the decision to liquidate those holdings and short sale stocks in 2008, he faces 20 years of convicted. >> so, what is in the 40 pages? >> he told as a see back in may that his trades were based on advice from a friend. wives areinner, the friendly, "he considers wayne one of the great health care paystors and said he would him $20 million per year is a consultant. >> we mentioned this is one of two cases, but the steinberg case? thise third week of trial, could be the longest cross examination ever. it involves the government's star witness and former technology analyst who said that his hits were packed on. steinberg also entered a plea of not guilty and wanted to prove
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that these starwood this is who pled guilty to their own crimes are not credible. >> su keenan, thank you very much, joining me from the newsroom with the latest on sac capital. is holding an investment symposium. to askhatzker is there larry fink about regulations. >> there is a possibility we could go to far next year with the volker rule. i will watch and see, i will not be a pessimist, but i am being pragmatic. i do think that i know more about close to markets than most. i am alarmed right now that it may be too far and it may have some unintended issues that could be impactful. also asked larry fink where he thinks the next crisis could come from. >> the next crisis, i believe, will not be coming from banks. i do not know where it will come
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from. maybe technology. maybe it will be cybersecurity and it will impact a lot of us, but i do not think the big crisis will be in financial services as much as some people worry about. >> he also met with the president of black rock asked about the firm's outlook. >> we think that growth is going too slow for a longer. of time. we think that the fed is going to keep monetary policy easy, meaning that short-term rates are going to remain where they are and long-term rates will move upwards a bit. and the stock market, you know, right now things are pretty high. we squeezed a lot of juice out of that and maybe we have a bit more. we want to be a bit cautious for the longer-term right now and we want to make sure that people are using this diversification to understand that correlation may work against them if the in the way weact
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are thinking. >> speaking of big money, big deals, if you follow private equity you know that the largest leveraged buyout in history is the $45 billion buyout of this texas utility. kkr, goldman sachs partners, and tpg bought it privately six years ago. it has been a painful investment for the owners, but there may be a silver line in for a small number of bond investors. mary childs is with me now and has more on the story. mary, there is a potential $1 billion on the table somewhere? >> that is right. this comes from morgan stanley analyst to pick the trade about a month ago who said that if you investigate the language within the overall giant capital structure, it sure looks like the second lien debt seems to have stronger language for covering investors than the first one. normally when you have a bankruptcy, the first one gets paid first, second second, and so on, but it looks like you're
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the language makes such a difference. >> as you pointed out, this is basically the opposite of how things usually work. have you seen this before? like there are other examples where this has happened, it always behooves investors to read the documents and know the language, it is something like this where it can make a big difference. >> does it show how desperate these distressed investors are before we close the books on 2013? >> it has been hard to find good deals. there is not a lot going on. he does this deal is so massive, everyone has a piece and you have to do your homework and pick through everything, but this one quirk means that you can pick up a bit more. >> there is a lot of distressed debt waiting in europe. they are basically waiting all over. the next fewng years will be great for us, but this year has been a little bit slow. there have been a lot of assets that have been, let's just say,
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put off. >> very true. they will tell you to look for niche investing that you can dig into, but at the same time some of the guys will tell you that the more things that run up, the more pain there will be later. as long as investors are happy, everything is great. >> all right, mary, great to see you. thank you very much, joining me there on that interesting twist xu debt.u -- t bitcoin is in its own category, so with all of the attention we have decided to celebrate the 12 days of bitcoin. first things first, you bought one. how easy was it? how did it go? >> it turned out to be eu with my final method, but it was difficult when i got started because i had not educated myself enough on the world of bitcoin, but also partially because i was not willing to let
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go of certain details, like my bank account each else, my social security number. i did not want to add credit cards to websites that i just did not know. i did not feel comfortable with that and to me it did not seem like what bitcoin was all about. so, at the end of a number of different attempts, through a number of different websites, i finally got max to sort out one for me and i bought it this morning for him, $800 in cash, which is a present -- pretty decent price right now. >> what did you buy with it? actually bought three pizzas here for people around the office. it was a pretty easy transaction. i got more pizza than i ordered in the first place. i have more than one of my wallet now, because so many people have seen what they are doing here and they have just sent in what they call tips in this community. three dollars, two dollars, one
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dollar 50 cents. all of the tips they have sent in have added up to more than the pizza cost, which was about $30. it has been an interesting experience and it has helped me to see the community in a different way. it is not just about the price of bitcoin, which as we all know has been incredibly volatile lately. i have been used to thinking of 2 dollars, of 1, maybe $100 when it seemed like it was peaking, now it has dropped to $600, we are looking at 850 dollars, but there were a number of different things i planned to do. i will be buying stuff, converting some of it into precious metals, for the next 10 days we will be getting deep into it. >> looking forward to it and the accompanying song that you are going to write. it will equal the 10 days of -- 12 days of christmas. >> that song. yes, i will give it a shot. >> i will work with you on it. thank you, matt miller.
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coming up, a new fund that offers a liquid alternately -- alternative to private investments. plus, a big heal making day for cisco, poise to become the largest -- largest food distributor in north america. we will show you what it means for the industry. latest heir ron merkel's prize, gold medal won by a u.s. sprinter, jesse owens, at the 1936 olympic games in berlin. we will give you more details when we come back, right here on "money moves." ♪
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next guest manages a $2.2 billion fund of fund is a mix of traditional hedge funds and president, bob worthington, with me now. moves."back to "money great to see you. part of what you have talked
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about in the past are these hedge fund strategies in mutual fund wrappers. so, average investors can get access. now you are doing the same thing with private equity? >> that is correct. we have a new fund that is meant to be an alternative to private equity investment in a liquid daily value format. >> basically people who are nonaccredited, they do not have to meet the benchmark of having $1 million in investable assets can participate? anyo can participate, bottom line? >> yes. >> why are you doing this? i assume because you think you can make money. so, what is the idea? >> most of the advisors we deal with have a hard time accessing private equity for a number of reasons. you have call capital, committed capital, it can be hard to understand for the individual investor. second, it is a liquid. some one like -- someone like
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that may not want to lock up their money for so long. we have an innovative way to achieve what we think will be close to a long run in a mutual fund format. >> what is the secret sauce? how have you put this together? >> we have partnered with firms and it allows us to construct a portfolio to deliver that kind of information. the largest provider of private equity data in the world is working with us. those firms, together, worked on creating an index out of europe. what we are trying to do is get the information that they deliver to us that is updated weekly and we basically replicate the index. so, they developed this about 13 months ago and we launched our fund in the last month. >> it is obviously too early to ask, but so far, so good? >> exactly. we are trying to deliver two
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percent, three percent above equity returns, as it is globally bas. >> i was going to say, this year if you are just giving the s&p 500 is hard to pull off. >> it would be this year, part of this is we look at how private equity firms are going to allocate capital on a sector basis. so, in times square, let's just say the market is difficult, they may not be investing as much and we will then put more cash in the portfolio. therefore, during difficult andet environments we file better protect capital than the equity markets, certainly more than listed private equity. >> how are you seeing this entirely week -- entire of private assets going? whatever category, how do you see it from a bigger picture point of view? >> it started in germany and
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grew. it took a long time for the interest to develop, like anything else, the proof was in the putting. we have competitors in there who have done well and it has really started to grow and i think that the industry and ourselves, specifically, achieved the best years not only in raising, but producing the types of returns investors expect. >> there is this idea of transparency, as well, which had only been available to a select group of very rich people and institutions before. >> correct. now when you have a daily value open-end mutual fund, the transparency is stupendous. we can provide whatever level the individual advisor wants to give to his or her client. >> how did you pick the managers? >> very few people could do something like this in the private equity world. is database that they have tremendous, all-encompassing, the best in the world, in our
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opinion. to work for a firm like ues, which is so good at the quantitative analysis of things, to help to put together the index, those are three strong partners we were able to put together with a stump what they had done before. >> bob, come back and let us know how it is going. bob worthington in the meantime there. we have a quick break to take and when we come back, the fashion iq of high- brands. our guests rated the social media strategy of well-known luxury labels. he will tell you what he found. we are back in a few minutes. ♪
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holidays, high-fashion, the role of digital marketing, all
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connected. the nyu think tank for digital innovation just released its topal rankings of the brands. scott galloway is with us. so, burberry, i know that is just one of the ones that was on your radar screen. what did you find? which ones are managing their social relationships the best? >> burberry is number one for the third year in a row, but there are some impressive smaller brands, like tory burch and kate spade, they are putting a lot of money into digital and it is paying off. >> digital, with the ones that you just named i know that there are these pop-up shops that they want to connect the best of all theworlds. >> it is perception of attribution, where people tend to look at these e- commerce sales as an indication of what is paying off, but you arm is -- missing the majority of the story here. while 1, 2, and five her juices
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are made online, four out of five are influenced a digital. for example, mobile commerce will only be a $30 billion business in three years. >> but it has influenced more decisions? >> $750 billion influenced by smaller screens. your digital presence influences a lot more. >> how do you measure that? that is tricky. >> we spent a lot of time spent -- a lot of time thinking about that. what we are finding is that these firms with strong digital iq's, there is a strong correlation between year on year revenue growth and shareholder return, which makes sense, because when you get good at digital, it is like working out. you find that every other part of your life gets better. >> that is so inspirational for the new year. >> drop and give me 20. if you become more data-driven, you start thinking about a younger consumer and emerging technologies as a platform. those kinds of skills lend
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themselves well to all kinds of things. we are seeing the firms really committed to strong digital as having this kind of rising tide affect across the entire enterprise and we are seeing it meet the greater shareholder return, so digital is moving to the center in terms of making this a part of culture. >> he said burberry was number one, gucci was number two? >> the interesting thing there is that some of the great things they are doing or being shared across the entire enterprise, so there is real enterprise value as we track those brands. that is what a multibrand enterprise conglomerate wants, to show that the tactic of leveling brands is paying off. >> they had better show it, those margins are crazy. >> that is exactly right. they want to show that there is a reason to have more than one brand in an enterprise. >> when you talk about some of these subjective qualities about the digital experience, how
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important is design? storytelling? >> super important, but i would say a lot of brands have aired on the side of creative -- errored on the side of creative. the bottom line is that the web is another channel of distribution, it is about saving time, getting to the product in the right information. social media is about wasting time. but i say that in the best way. thevideos, the fun, learning about how the banana bag is crafted, you want to learn about that on the facebook page or follow the design on instagram, but when you get me to the site follow a funnel to the trend purchased on-site or in-store. >> i like that a lot. social media is about wasting time, being online is about being educated? >> this is a new channel. the best brands are getting 20% of their sales with a greater
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percentage of it coming from online that is a multiple that is getting the attention of ceos and board rooms. >> scott, always glad to have you with us. thank you for coming in. scott galloway, joining me there, professor of marketing at the nyu school of business. 26 minutes past the hour, time for bloomberg on the markets. julie hyman has everything you need to know about trade from the newsroom. >> markets are actually coming down a little bit off a high of the session, we have a rally today but it is a bit of a tepid one. second day momentum coming from the better than estimated jobs report on friday, sparking a one percent rally on that day, not sparking much of a continuation today. in terms of individual movers, natural gas, trading around six- month eyes as an eye storm is expected to blanket -- six-month highs as an eye storm is expected to blanket the u.s.. we are also looking at the
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british pound, strengthening for its second day against the greenback. the country's economy has reportedly been stronger as they forecast a narrow trade deficit for the u.k.. more on the trade market in 30 minutes. ♪
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>> this is "money moves," where we focus on innovative alternative investments. here are your bloomberg top headlines. we are following john paulson, making a comeback after a few years of wrongly invested, his investment fund is up 30% this year, according to people briefed on the returns. profitable positions on m&a are part of the strength. he is best known for making 15 billion dollars by betting against subprime in 2006 and 2007.
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the new american airlines has taken off, the merger between american and u.s. air officially closed today, creating the world's largest carrier. the new ceo says that flyer should not be worried about the changes. the employees, the airplanes, that is how this merger works. we need all of that. the networks are highly complementary. so, we put the networks together and we have everything we need. the supply is unchanged. if the supply is unchanged and demand remains constant, there should be no changes in price. rises in our business move a lot based on indiscriminate factors, but this merger is not going to be one of them. >> the olympic gold medal won by jesse owens at the 1936 games in berlin has been bought at auction for almost one and a half million dollars by billionaire investor ron burkle. the price tag is a record for olympic memorabilia.
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he won four gold medals in berlin, infuriating nazis and adolf hitler. andle reportedly plans educational tour with the metal. more talk of progress with the budgets, our chief correspondent, peter cook, has more on the display. progress but no deal? >> and the clock is ticking. friday is the deadline for house and senate negotiators to come up with a new budget that removes the threat of the government shutdown right at the end of the year. i am told they are close to a deal but the details are still being worked out and it will be modest at best. the event still being negotiated would set federal spending levels for the next two fiscal years and the annual cap would be one dollar trillion per year, higher than what is under current law. sequester cuts would be replaced by revenue in other areas, but they are avoiding the big questions, no major changes to taxes or entitlement programs.
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murray and staffers continue to make progress over the weekend but the deal taking shape already has some critics, like powerful maryland and virginia lawmakers proposing that they receive more money for their pension plans. conservative republicans do not like the idea of putting the current spending cap there. democrats want more on emergency spending benefits with unemployment at seven percent, which is a tough sell right now to republicans. a lot of things out there for people not to like in this deal, so it is no slam dunk even if the deal is sealed by friday. >> peter, thank you very much. budgets in washington, d.c. to back in new york and fending off activist investors, at least one in this case. bill ackman, that is one of the names you need to know. herbalife has added an independent orton member with an illustrious career focused on poverty and is approaching
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investors suggesting they pull money out of the $12 billion firm. it looks like a completely new tactic. we will bring in tangent capital partners, an expert on the strategy. what does this say? is this changing the strategy a bit? >> it will make these flights so much more entertaining than the used to be. it used to be a big fight and one particular area, but now the battlefield is expanding broadly . to understand the real drama here, you have to remember how they are attacking this. these are not just general activist strategies, the idea is to go short and big and then make the big announcement. this is what i have done, this company is a fraud. >> saying essentially that herbalife is a pyramid scheme. dangeroust is it charge. >> the stock should fall like a stone and he will make a fortune on the short decision, which is the idea.
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>> because the short decision, as you have instructed us before , there is unlimited loss potential. >> this is a particularly dangerous way of playing the activist game. he has unlimited loss potential like carl>> small guys, icahn and george soros, saying -- wait a minute, that i will have to buy back the stock, so he is kind of inviting other long investors to put him into a short squeeze, which makes him very dangerous, but now there is a third level. >> you were kind enough to provide us with a chart so that we could play the home game. pretty big names here. >> you see what happens, when ackman first made the big announcement, the stock did in fact to drop dramatically. carl icahn said he was not so sure about this, he came in and the stock recovered, but later on as they looked at this and said that they could force the
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sky to sell by jumping in, this shows you how much risk there is in this tactic. that is important to understand. this new tactic, i think, could be fairly effective. herbalife is now going to the youstors and saying -- do see how dangerous the bet is that your client has made? a goodat sound like fiduciary bet to you? >> they are essentially targeting the consultants, basically with bigger pensions plans and other institutional investors. >> remember, these big plans have a very keen year for the words fiduciary duty. >> want to instill panic? >> exactly. they are going to the consultants who advise these guys, like the new jersey state pension plan fund, saying that this is not consistent with fiduciary duty to make that's of this nature, what do you think?
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this counterattack, this brand- new idea that we have never really seen before, combined with the idea of bringing in a high profile person that people feel very good about adding to the board at the same time -- i must say the company is doing a wonderful job at fighting back on this. >> probably creating a new kind of playbook for current and future activists. >> i think that for the targets of these activist investors, the ones who are going short and making big announcements, there are some very interesting plays that i can guarantee you will see again. >> chances are we will be chatting about it as well. you.ice, as always, thank we have a quick break to take and the company soon to be ofponsible for the majority restaurants in north america -- we will dissect the deal at s ysco. back in two minutes. ♪
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>> welcome back to "money moves," on bloomberg television, streaming all day long on your tablet, phone, and bloomberg.com. north america's largest food distribution companies called sysco, buying closely held u.s. distribution foods. alix steel is with us now and has the details. this is going to be some regulatory hurdle. >> that was the question among analysts and the call today. selling anything from paper and accurate -- paper napkins to cups across the country, schools and restaurants, you name it, they sell it.
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about onelivers quarter of those sales and we reached out to them for their thoughts, but no comment yet, which is interesting. >> just how much of the market with a control? >> they are already the leader in 18%. you are looking about -- looking at about one quarter of the industry. jack russo said that there were a lot of mom and pop businesses in this space, but that it did not mean the deal would not go through, but just that they might have to sell off some of the smaller parts of their business. cisco it -- sysco expects the deal to close next year. trough after the lackluster rally. >> so, why does this deal make sense now? the biggest food distribution deal in eight years, why now? >> its peace to the fact that the food industry is really struggling. people are eating out less. even people making over $100,000
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were not eating out. on their last conference call the company said that people are spending that extra cash either not at all or on durable goods, which did not vote well for the food industry. i tracked food stocks correlating to the job market over the past five years. cisco can relatively track u.s. hiring, but the merger provided a catalyst for cisco and the job market was not really helping. >> what happens from here? >> what does it look like? the possibilities pretty huge, right? you have to buy it from a manufacture and sell it to a customer. , in allale, efficiency matters. it is expected to generate cost savings of $300 million after four years, buying power, they can literally buy more stuff and get better prices. the other winner, i should point out, is private equity.
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kkr owns 98% of u.s. foods, they purchased it back in 2007. win for themf a win- as well. >> alex, thank you very much. that was our markets reporter, alix steel, with the latest on the cisco acquisition. bigking of retail and names, all day tomorrow inside ups, the biggest day of the year for the package delivery company. carol massar will be there with the company's one billion -- at the company's $1 billion hub in kentucky. more than 4 million packages per day are sorted there during the holiday season. we will bring you a rare interview with the ceo, scott davis, and more on the algorithm that is expected to save them $50 million per year. in the meantime, taking a break and the future of gaming, the ceo of one startup that is developing high-end 3-d gaming
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technology for any platform. we are back in just two minutes. ♪
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>> welcome back to "money moves," and as you can see on your screen there, treasury secretary jack lew is speaking at a meeting of financial stability oversight council. today they are discussing cybersecurity. you can watch the meeting live bloomberg.com/tv.
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in the meantime we will be focusing on cutting-edge gaming and cross-platform engine technology, the match that flannery is betting on. the coo is with me now. glad to have you with us. i know you are developing 3-d social online games and the catch is that people can play on any platform, correct? >> thing you for having me. our technology is to deliver our users, wherever they are. i os, android, smart tv, pc, anywhere. >> how is this different than some of the other competitors you are facing? >> we are basically developing a that requiresame high-end quality graphics and at the same time, we want our users to play anywhere.
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many companies can deliver it to any device. so, we optimize our engine to any device. so, we have the technology. it is very exciting. you make of this shift, back-and-forth, away from consuls, away from the living room, to mobile and social? that seems to be the larger trend, but i know that there are products out there trying to bring gaming back to the living room. how do you see it? know, people, when they watch television, they look at the top part, they're smartphones. either tablet,s pc, smart phone, or even tv. so we develop high-quality that people who like our content can use any device. delivered anthis
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awesome experience for game users. >> speaking of content, i know that you have a game that will be released in a few months that is called mother of ms.. what are you expecting? how is this going to get your company's name on the map? space, not many companies making like this, complicated rpg games. market you can see a little bit of simulation, action game can deliver and storytelling, like ancient greek and roman mythology. people who love and rpg will follow our game pretty well. do you thinklly, that that will draw in gamers? >> yes. >> obviously, or you would not have built it, of course.
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you recently just to did a fund raise and i know the idea is to expand in north america and other parts of the world as well . where do you expect to see the most reaction from this game? north america, asia, europe, or does it not matter? >> we are focused on the western markets, north america and europe. we have been successful in pc online games, but this is our first try where we see the is where you just play anywhere, like multiplatform. deliver good content, they will play our game anywhere, so it is exciting. thank you very much. when we come back, a complete update on the markets right after this break. ♪
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>> tomorrow, venture capital firm in china seeing big opportunities in data software and i.t. companies. one of the managing directors will be our guest. that conversation is just one of the ones coming your way tomorrow. time for "on the markets." julie hyman is with me now and has more. what is going on in trade? >> alluded of again for stocks today, riding the momentum sparked by friday's better than estimated jobs report, but it is not a lot of momentum when you look at the dow jones, which gave up a lot of gains earlier in the session.
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the s&p was doing their best, two/10 of one percent, they wanted to look at treasuries. those are little changed, not a lot of movement in treasury today, but if you look at the yield curve, the gap between the 10 year and the 30 year, it is as if it is the narrowest level in 30 weeks with speculation on inflation remaining in check as the fed slows down its bond purchases and narrows the yield curve to some extent. a couple of individual movers we want to look at today, the second-largest u.s. food producer, a natural resources, selling its stake in shale gas to rice energy. they will get $100 million in cash and the remainder of the stock of the energy company waiting to go public. jcpenney, the struggling retailer is expected to continue the positive in-store sales trend as they take back market share from competitors. remember, they had a small gain in october and then a 10%
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possible sales gain in the month of november, a really pivotal few months were jcpenney. while jcpenney might be turning things around, sears is having a tougher time of it, leaving the coo in a bind on two fronts on the one hand as he struggles with the core business and his hedge fund itself. remember, last week he announced he would be spinning off lands and into a separately traded company where the existing shareholders would get shares in the new venture, but if you look at their core business now that lands end is gone, critics have been saying that he still has a lot of work to do their. the company has had 27 straight orders of declining same-store have prophets not to speak of and has been -- and he has really been pouring cash into the business i spinning things off or focusing on the core business, incidentally selling stores in sears canada, and next on the block and
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potentially be the automotive business. analysts are also saying that it might be tricky to value the business. after all, they thought that lands end would be worth more than it looked like, which will be valued in the spinoff. in part the financials look worse than many analysts had anticipated. you have these issues with sears, which they had been struggling with for a long time here, and then you have hedge fund redemption. some of the investors who signed on back in two thousand seven invested about $3.4 billion in his main fund and the partners asked for their money back. he gave the money back in the form of shares at sears, returning capital to investors in the form of his other holdings, including autonation and autozone. that is the other front on which he is facing issues and analysts say that you could see his stake drop even further as a result,
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potentially, or more redemption. we will keep watching the situation is more investors look to sears to realize the value of more of their real estate. more in 30 minutes, "street smart" is next. ♪ wil in the volatility, we are taking a higher, a move to a record high. 59 minutes to go until the closing bell. your last trade of today and your first trade for tomorrow. another day and another record. >> isn't it amazing? one after another. take marcus down for three or four days and guys come in and buy. that happened last week. here we are. i will show you thr